South Korea’s four leading oil refiners are expected to post a combined operating income of 2 trillion won (US$1.74 billion) in the first quarter this year.
Hyundai Oilbank Co. said on April 26 that it recorded 2.53 trillion won (US$2.2 billion) in sales and 201.9 billion won (US$175.64 million) in operating profits in the first quarter. Although its sales dropped 27.8 percent from a year earlier due to lower oil prices and product prices, its operating income surged by as much as 106.4 percent. Accordingly, the company has seen the operating profits for the 15th consecutive quarter.
SK Innovation Co., which announced its results for the first quarter last week, reported 9.46 trillion won (US$8.23 billion) in sales and 844.8 billion won (US$734.93 million) in operating profits. The operating income figures are up a whopping 206 percent, or 569 billion won (US$495 million), from the previous year
S-Oil Corp. also posted 3.43 trillion won (US$2.98 billion) in sales, 491.4 billion won (US$427.49 million) in operating profits and 432.6 billion won (US$376.34 million) in net profits in the first quarter. The company also saw its sales decrease from the previous quarter. However, it recorded 14.3 percent of business profit rates, which is the highest since 14.5 percent in the fourth quarter of 2004, thanks to the highest operation rate of major production facilities and the improvement of facilities.
When GS Caltex Corp. records 500 billion won (US$434.97 million) in operating profits in the first quarter as industry sources and securities firms has predicted, four leading oil refiners will see their operating profits surpass 2 trillion won (US$1.74 billion).
Despite such stellar performance, the local oil refiners are still being careful. This is because there are numerous external variables in the industry, including volatility in oil prices, though they just put up a good show due to the current low oil prices and high refining margins. Also, they share the crisis consciousness that they should prepare for the future in the long run, like changes in the energy industry.
During a recent press conference, SK Innovation Vice Chairman Jeong Cheol-gil said, “Short-term booms and long-term depressions become the new normal in all industries due to the intense competition and low growth. We are running the business according to our core values seeking to improve the competitiveness and create the differentiated structure so the company can endure in difficult times.”
Therefore, the local oil refiners are bracing for recession by shifting their focus from refining business to non-refining business. SK Innovation, the nation’s largest oil refiner, is focusing on electric vehicle battery sector. The company is currently expanding the production capacity of its battery plant in Seosan, South Chungcheong Province, from 30,000 units to 40,000 units. GS Caltex is planning to establish a plastic compounding plant with the annual production capacity of 30,000 tons in Mexico in a move to expand its plastic compounding business. The company already operates plastic compounding plants in China and the Czech Republic. S-Oil plans to build the Residue Upgrading Complex (RUC) and Olefin Downstream Complex (ODC) by 2018, while Hyundai Oilbank is constructing a mixed xylene (MX) manufacturing plant at the Daesan plant in Seosan, South Chungcheong Province, along with Lotte Chemical.